Interviews

Wal-Mart and Girl Scout Cookies: Thin-Minty Gate

One interesting thing that happened while I was on vacation was the news that Wal-Mart is test-marketing imitations of the two best-selling Girl Scout cookies, Thin Mints and Tagalongs. To get a "flavor" of the reactions to this move, check-out the post that CV Harquail did on her blog Wal-Mart Knocks-Off Girl Scout Cookies. And see CV's follow-up post Thin-Minty Gate. Over 150 people commented on the first post and this news has spread far and wide. As regular readers of this blog know, I am biased in this matter because my wife Marina Park is CEO of the Northern California Girl Scouts. My view (and I am not speaking for Marina, in fact, I didn't tell her I was writing this post) is that -- holding things aside like ethics, financial damage done to the Girl Scouts, and other things that harm outsiders -- this is a dumb business decision for Wal-Mart, and the real mystery is how the smart people at Wal-Mart (and they are smart and decent human-beings) could do something that:

1. Further fuels their reputation as one of the most heartless and greedy companies on the planet (true or not, they are seen this way in many places).

2. Damages their relationships in communities where they already have stores. In many of those communities, Wal-Mart works closely with Girl Scouts to provide a place to sell the cookies in front of the store. The weird dynamic of having very similar cookies sold inside Wal-Mart at a lower price may or may not hurt the cookie sales (because most of us realize that, after all, they are going to a good cause -- allowing girls to go to camp, on trips, buy equipment for learning projects, supporting programs for inner-city girls and those in juvenile detention facilities, to pay remarkably dedicated and modestly compensated staff members, and on and on). But it clearly hurts Wal-Mart, creating the perception that they are going into direct competition with those girls and are acting out of pure greed.

3. Makes it harder to open new stories. It turns out that when Wal-Mart wants to put a store in a community, there is organized resistance in about one third of cases and that, when it happens, this resistance is highly effective: the store is stopped about two-thirds of the time. So, roughly, Wal-Mart fails to get stores where it wants in over 20% of cases as a result of resistance from communities. And even when they do overcome the resistance, the fight costs them serious time and money. In light of these facts, going toe-to-toe with Girl Scouts is sheer idiocy because it provides a compelling rallying cry ("Wal-Mart isn't only going to be competing with the local merchants, they are also going to undercut the Girl Scouts") that increases both the likelihood of resistance and the success. I have no access to the numbers, but I am willing to bet that if Thin Minty Gate results in the failure of even one store opening for Wal-Mart, any profits from the knock-off will not offset the cost of losing that one store.

Perhaps the most interesting question here is how such smart people could do something that is so dumb. It sounds more like an Onion story that a real story. I don't claim to have deep or extensive knowledge of Wal-Mart, but we did work with some fairly senior executives from Wal-Mart several years back in one of our d.school classes (see here and here), and I was quite impressed with their action orientation and focus on cost-saving and efficiency. The brilliance --and the Achilles heel -- of Wall-Mart is that they talk and act as if the answer to every problem is to use their scale, bargaining power, and speedy implementation to tackle any problem by driving down the price they pay and pass it along to consumers. This is great, for example, when they use their bargaining power to bring down the cost of environmental friendly LED lights in their refrigerators so that they become cheaper than traditional lights. But when "everyday low prices" is the solution to every problem and -- despite lip service to other constraints -- almost nothing else drives your behavior even when it hurts you badly (as in this cookie caper), your core cultural values can hurt you badly.

As far as I know, Wal-Mart hasn't announced that they are stopping the knock-offs. My prediction is that they will come-up with some bullshit business reason to do so. If they were smart (and there is research on this, on how to deal with mistakes, which we talk about in Hard Facts and I touch on here and here) they would: 1. Confess it was a mistake, that they should have been more sensitive to the importance cookies to Girl Scouts; 2. Explain this episode has made them more sensitive to how pure business decisions need to be considered in light of community relationships and their corporate image; 3. Announce and take formal steps to show they have learned this lesson.

Let's see what happens. My experience with Wal-Mart is that these are good people who mean well, they are extremely competent, but sometimes are blinded by their culture -- this appears to be a case where they suffered from a severe knowing-doing gap that could have been averted by simply asking a few objective outsiders to react to what they were doing. But asking others for honest feedback and listening to them is something that we human-beings often fail to do, despite the best of intentions.

Congratulations on having this post be selected for inclusion in the Carnival of Trust, hosted this month by John Caddell.

The Carnival of Trust, held monthly, is a compilation of the best blog posts reflecting on trust in business, politics and society. Your post exposing the honesty and greed in Wal-Mart's plan to sell knock-off Girl Scout Cookies brought in a lot of discussion.

Thank you for your great writing and contributing to a fantastic Carnival.

What concerns me most---and not totally because of questionable raw ingredients or quality control issues---is that the knock-off cookies will probably be sourced from China. The corporate profit motive has driven all too many U.S.-located manufacturers out of the supply chain, while a fair number of "patriotic" citizens blindly continue to send dollars abroad with every WalMart /Macy's /Home Depot /et cetera purchase...never stopping to consider what the "Made in _ _ _ " label says.

And maybe not caring.

If only we consumers were not so blinded by our culture of greed and low prices at any cost.

It is very under-handed of Walmart to offer the knockoffs at a cheaper price inside their doors, because everyone knows that when you buy an authentic box of delicious Girlscout cookies, you are contributing to a good cause. It is not surprising Walmart would do something like this; I know more people that hate Walmart than people who hate doing their taxes. My own mother refuses to shop Walmart because of their conglomerate ways, crowded isles, and less than friendly staff. It has also been shown they give less women promotions and do not treat their employees well as a whole.

The most important issue in this article is the community responsibility Walmart carries. (Or lack thereof in this case). It is in bad taste to go into direct competition with an organization they work closely with in order to provide a safe place for these girls to fund-raise. In communities where Walmart is already established, their profits exceed that of the local Girlscout troop by a disgusting amount. This truly is an act out of pure greed. And besides, if Walmart really wanted to make a profit off these faux Girlscout cookies, they would offer a Carmel DeLite knockoff. Mmm..

Walmart has begun to tell Girl Scout Troops that they can not sell cookies outside of their stores. Fall cookie sale councils and troops are now finding this out. Not every Walmart is adhering to this, but a great many are.

Is it really surprising that Wally World is making knock-off Girl Scout Cookies?

This is nothing new. Compare the Thin-Minty Gate to the businesses that were forced under and the land slides that followed. People lost their jobs, customers, and even their culture because of Wal-Mart.

But won't it be more heartless of the customers who walk past the Girl Scouts on their way into Wal-Mart to buy the knock-offs?

I feel for the Girl Scouts, but it is not Wal-Mart's responsibility to discriminate.

I would venture to guess that the reasoning behind this is to make available year-round those delicious cookies. Wal-Mart sees a market and decides to fill it. Yes, there may be fallout that could cause one store to delay in opening (or not altogether). But the outcry would have to be quite large for them to change this. (One town boycotting a store could easily be swept under the rug)

In the end, Wal-Mart will do whatever benefits them financially. You have pointed out their Achilles' heel; I call this being 'too big for their britches.' I'm reminded of a very large company I supplied once. Because everyone simply did their job, and the stockholders must be pleased, no one effectively communicated with one another and other people and businesses suffered. The rigidity of being a giant...

Dr. Sutton,
This is my first time reading your blog and the Wal-Mart story is fascinating. It almost seems too cartoonish to be true. It seems to me that there are two sides to this story.
On the one hand it seems unsustainable for Wal-Mart to come out with a product like this. Even if it is profitable it seems that they run the risk of alienating a sizable portion of their consumer base. Perhaps the sheer size and influence of Wal-Mart will prevent this from happening; but it seems that a company that has as many P.R. problems as they do would want to avoid this type of headline risk. I'm not sure if Wal-Mart won't lose more revenue from lost customers and bad publicity than they gain from sales of the cookies.
However, it is possible that Wal-Mart made the decision to sell knock-off girl scout cookies because they believed they would be supplying a service to a certain demographic. For some lower income households girl scout cookies may be prohibitively expensive. Perhaps Wal-Mart believed that certain aspects of their consumer base would be interested in a low cost alternative to a preexisting product. Isn't this what they have done with items like socks or pencils?
I believe that Wal-Mart was unwise in the introduction of a product that appeared to undercut the Girls Scouts. However, couldn't introducing a low cost alternative to a popular product have seemed like business as usual? Wal-Mart may have only believed they were following their established business model. It seems doubtful that Wal-Mart would have introduced a product that was purposely malicious. Rather, they introduced a product that was simply careless.

Their intention may be to make GS-like cookies available year 'round, rather than one time a year. The result is looking like the creep that grabbed gramma's cane and tripped her on her way across the street.

I generally have a negative reaction to this type of article. The fact is Wal-Mart has been successful because people by the thousands shop there--even the ones who complain about how unfair the store is.

My approach is to shop at a store where the ownership is close to home and the store provides products manufactured nearby. It's almost impossible to find such a store and I don't fret about it, but it is a factor. For example, there is a local store in my town that sells tools. They have a great selection and the owners are local. The downside is that the prices are a little higher and most of the products are built in China.

I think in the case of Wal-Mart, the fact that we have a choice is not the problem, but rather the choices we make. Yes, sometime I end up at Wal-Mart when there is no good alternative, but for me it is low on the list of places to shop.

I was curious on your thoughts about the "Keebler Fudge Shop Grasshopper cookies" that are clearly a knock-off of the popular "thin mint" Girlscout cookie. Did this receive the same degree of publicity when first marketed? Thanks!

Wal-Mart is missing the huge opportunity to partner with the Girl Scouts.

Imagine how many suburban neighborhoods just don't get a visit from the Girl Scouts. It would be incredible if Wal-Mart leveraged their marketing clout to publicize that the girls will be selling cookies right in their stores.

They could also use their supply chain to help the girl scouts cut down on their overhead, helping truck and store the cookies.

I could also imagine some great PR about how Wal-Mart provides a safe place for the Girl Scouts to sell cookies rather than door-to-door (which is very scary for many parents).

Know that Wal Mart has a partnership with the Girl Scouts would likely bring in non-traditional customers that sometimes don't shop Wal Mart (think urbanites and yuppies).

When is your biggest strength your greatest weakness? When you use it in the wrong place at the wrong time:
"The brilliance --and the Achilles heel -- of Wall-Mart is that they talk and act as if the answer to every problem is to use their scale, bargaining power, and speedy implementation to tackle any problem by driving down the price they pay and pass it along to consumers."

That really is disappointing, and I do have to wonder if it will cut into the Girl Scout's sales. Sure it's a good cause... but those cookies also taste good and normally you only get to have them when a Girl Scout comes along...

Well we'll see how much WMT has changed. This is a J&J moment and with a little judo they could reverse all the bad publicity by coming out with an apology and offerring to work with the Scouts to not offer them during their selling seasons.
But from the days we worked with WMT there have been some fundamental changes - previously EDLP and scale. There's an outstanding Rose interview with Lee Scott anyone ought to listen to in which he talks about how outside directors got him to see the old shibboleths were sterile back in '04. By '06 they were well on their way to a complete top-to-bottom revamp (anybody read today's WSJ story ?).
I used WMT as an exemplar of how to re-think and re-factor to meet changing circumstances in two longish posts that went from strategic down to functional details.http://llinlithgow.com/bizzX/2009/03/time_for_another_look_at_wmt.html
is the first.

Not living in the US, I don't know anything about this story apart from what has been written here, but a couple of points did occur to me and I wonder if anyone could answer them for me?

First, are the Girl Scout cookies available everywhere all the time? If not, is it possible that Wal-Mart's plan is to use their copies to take advantage of the rest of the marketplace the Girl Scouts are not currently using? For example, might they withdraw their own at times when there is a Girl Scout stall in-store or nearby, but sell them the rest of the time?

Secondly, Wal-Mart is a multi-national. In the UK, we have them (in the form of ASDA), but we don't have Girl Scout cookies. Is it possible that Wal-Mart have identified a popular product and are developing it for sale elsewhere, where the competition isn't an issue?

If any of the above turns out to be true, it still remains the fact that they seem to have been slow to extinguish a potential fire-storm of bad publicity.

Does Wal-Mart outprice the competition in enough product areas already? Leave the Girl Scouts alone! Even if they don't, though, I don't think they'll win here. Girl Scout cookies are an institution. The brand will see them through.

I didn't know your wife was the CEO of the Northern California organization. I spoke at their national conference last year!